Morningstar Residental Care Center v. Healthdatainsights, Inc. et al

MOTION to Dismiss , MOTION to Dismiss for Lack of Subject Matter Jurisdiction

N.D.N.Y.April 25, 2017

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK MORNINGSTAR RESIDENTIAL CARE CENTER, ►•~ Plaintiff, HEALTHDATAINSIGHTS,INC., UNIVERSAL AMERICAN SPIN CORP. d/b/a AMERICAN PROGRESSIVE LIFE &HEALTH INSURANCE COMPANY OF NEW YORK, agent of TODAY'S OPTIONS, Defendants. MOTION BY: HealthDataInsights, Inc. NOTICE OF MOTION TO DISMISS Civil Action No. 5:17-CV-00119 (FJS/TWD) DATE, TIME and May 26, 2017 at 10:00 a.m., United States PLACE OF HEARING: District Court, Northern District of New York, James T. Foley Courthouse, Suite 509, 445 Broadway, Albany, New York 12207. SUPPORTING PAPERS: Memorandum of Law. RELIEF REQUESTED: Order dismissing Complaint in its entirety pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(6), and 8, together with such other and further relief as the Court may deem appropriate. Dated: Apri125, 2017 BOND, SCHOENECK &KING, PLLC By: s/Suzanne O. Galbato Suzanne O. Galbato (510058) Hermes A. Fernandez (103444) Attorneys for Defendant HealthDatalnsights, Inc. Office and P.O. Address One Lincoln Center Syracuse, New York 13202-1355 Telephone: (315) 218-8000 2892492.1 4/25/2017 Case 5:17-cv-00119-FJS-TWD Document 15 Filed 04/25/17 Page 1 of 2 TO: Jessica S. Winik Ferber, Esq. Schutjer Bogar Attorney for Plaintiff 1426 North 3rd Street, Suite 200 Harrisburg, PA 17110 Telephone: (614) 359-9407 Facsimile: (717) 909-5925 Email: jferber~a~,s-b-b.com Katie Z. Van Lake, Esq. Sb2, Inc. Attorney for Plaintiff 1426 North 3 d̀ Street, Suite 200 Harrisburg, PA 17110 Telephone: (516) 506-1289 Facsimile: (717) 909-5925 Email• kvanlake(cr~,s-b-b.com Stephen M. Buhr, Esq. Greenberg Traurig, LLP -Albany Office Attorney for Defendant Universal American Spin Corp. d/b/a American Progressive Life &Health Insurance Company of New York, agent of Today's Options 54 State Street, 6th Floor Albany, NY 12207 Telephone: (518) 689-1400 Facsimile: 518-689-1499 Email: buhrs@gtlaw.com 7 2892492.1 4/24/2017 Case 5:17-cv-00119-FJS-TWD Document 15 Filed 04/25/17 Page 2 of 2 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK MORNINGSTAR RESIDENTIAL CARE CENTER, Plaintiff, -against- HEALTHDATAINSIGHTS, iNC., UNIVERSAL AMERICAN SPIN CORP. d/b/a AMERICAN PROGRESSIVE LIFE &HEALTH INSURANCE COMPANY Civil Action No. 5:17-CV-00119 (FJS/TWD) OF NEW YORK, agent of TODAY'S OPTIONS, Defendants. MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS BOND, SCHOENECK &KING, PLLC Attorneys for Defendant HealthDatalnsights, Inc. One Lincoln Center Syracuse, New York 13202 Telephone: 315-218-8000 2883996.3 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 1 of 29 TABLE OF CONTENTS Page . PRELIMINARY STATEMENT ..................................................................................................1 BACKGROUND ..........................................................................................................................2 ARGUMENT................................................................................................................................6 POINT I MORNINGSTAR'S COMPLAINT MUST BE DISMISSED IN ITS ENTIRETY AS TO HDI ...................................................................................8 POINT II PLAINTIFF'S CLAIM FOR CONVERSION MUST BE DISMISSED ....................................................................................................11 POINT III PLAINTIFF HAS FAILED TO STATE A CLAIM FOR BREACH OF IMPLIED IN LAW CONTRACT ............................................................12 POINT IV PLAINTIFF HAS FAILED TO STATE A CLAIM FOR UNJUST ENRICHMENT ...............................................................................................14 POINT V MORNINGSTAR' S CLAIM UNDER THE FALSE CLAIMS ACT MUST BE DISMISSED AS AGAINST HDI .................................................15 A. Morningstar's FCA Claim Must be Dismissed Pursuant to Fed. R. Civ. P. 12(b)(1) and 12(h)(3) ..................................................................16 B. Morningstar's FCA Claim Must be Dismissed Pursuant to Fed. R. Civ. P. 9(b) and 12(b)(6) .......................................................................199 POINT VI MORNINGSTAR'S MEDICARE ACT CLAIM MUST BE DISMISSED AS AGAINST HDI ...................................................................21 CONCLUSION...........................................................................................................................23 2883996.3 1 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 2 of 29 TABLE OF AUTHORITIES Cases Pages) 9310 Third Ave. Associates Inc. v. Schaffer Food Serv. Co., 210 A.D.2d 207 (2d Dep't 1994) ..........................................................................................11 United States ex rel. Antoon v. Cleveland Clinic Found., 788 F.3d 605 (6th Cir. 2015) ..........................................................................................16, 18 Ashcroft v. Igbal, 556 U.S. 662 (2009) ............................................................................................................ 6, 7 Atuahne v. City of Hartford, 10 F. Appx. 33 (2d Cir. 2001) ........................................................................................... 7, 11 Bell Atlantic Corporation v. TwomblX, 550 U.S. 544 (2007) ............................................................................................................ 6, 7 Bentley v. Wellpoint Cos., Inc., 2012 U.S. Dist. LEXIS 21731 (S.D.N.Y. Feb. 17, 2012) ................................................. 9, 10 In re Bernard L. Madoff Inv. Securities LLC, 458 B.R. 87 (Bkrtcy. S.D.N.Y. 2011) ...................................................................................12 Bishop v. Wells Faro & Co., 823 F.3d 35 (2d Cir. 2016) ....................................................................................................19 Bobrowsky v. Yonkers Courthouse, 777 F. Supp. 2d 692 (S.D.N.Y. 2011) ..................................................................................... 6 Bodimetric Health Servs. v. Aetna Life & Cas., 903 F.2d 480 (7th Cir. 1990) ........................................................................................ 8, 9, 10 Bradkin v. Leverton, 26 N.Y.2d 192, (1970) ..................................:.......................................................................13 United States ex rel. Chabman v. Office of Children &Family Servs. of New York, 2010 U.S. Dist. LEXIS 14938 (N.D.N.Y. Feb. 16, 2010), aff d 423 Fed. Appx. 104 (2d Cir. 2011) ................................................................................................19, 20 Cit~of Syracuse v. Loomis Armored US, LLC, 900 F. Supp.2d 274 (N.DN.Y. 2012) ...........:.................................................................11, 12 Empire State Fuel Corp. v. Warbasse-Cogeneration Techs., 26 Misc. 3d 1215(A) .............................................................................................................13 2883996.3 11 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 3 of 29 Foster v. Savannah Commc'n, 140 F. App'x 905 (1 lth Cir. 2005) ...... Gold v. Morrison-Knudsen Co., 68 F.3d 1475 (2d Cir. 1995) ................. ..........................................................................16 ....................................................................19, 20 Heckler v. Rini, 466 U.S. 602 (1984) ................................................................................................ 8, 9, 10, 21 Hoit v. Capital Dist. Transp. Auth., 2016 U.S. Dist. LEXIS 93576 (N.D.N.Y. July 19, 2016) ....................................................... 7 Holmes v. Allstate Corp., 2012 U.S. Dist. LEXIS 24883 (S.D.N.Y. Jan. 27, 2012) ........................................................ 7 Jamaica Hosp. Nursing Home v. Oxford Health Plans, 2000 U.S. Dist. LEXIS 13917 (S.D.N.Y. Sept. 25, 2000) .................................................... 21 Joan Hansen & Co., Inc. v. Everlast World's Boxin Headquarters Corgi, 296 A.D.2d 103 (1st Dept 2002) .........................................................................................13 United States ex rel. Joshi v. St. Luke's Hosp., Inc., 441 F.3d 552 (8th Cir. 2006) ................................................................................................ 20 Judge Rotenber~ Educ. Ctr. Inc. v. Blass, 882 F. Supp. 2d 371 (E.D.N.Y. 2012) ..................................................................................13 Kapral's Tire Svc, Inc. v. Aztek Tread Corgi, 124 A.D.2d 1011 (4th Dept 1986) .......................................................................................13 United States ex rel. Kreindler & Kreindler v. United Technologies Corp., 985 F.2d 1148 (2d Cir. 1993) ..........................................................................................17, 18 Luian v. Defenders of Wildlife, 504 U.S. 555 (1992) ..............................................................................................................17 MacPherson v. Town of Southampton, 738 F. Supp. 2d 353 (E.D.N.Y. 2010) .................................................................................... 6 Manorcare Potomac v. Understein, 2002 U.S. Dist. LEXIS 21488 (M.D. Fla. Oct. 16, 2002) ................................................ 9, 10 Medina v. Bauer, 2004 U.S. Dist. LEXIS 910 (S.D.N.Y. Jan. 27, 2004) ............................................................ 7 United States ex rel. Milam v. Univ. of Texas M.D. Anderson Cancer Ctr., 961 F.2d 46 (4th Cir. 1992) ..........................:.......................................................................17 2883996.3 111 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 4 of 29 Parsa v. State, 64N.Y.2d 143 (1984) ...........................................................................................................13 Phillips v. Kaiser Found. Health Plan, Inc., 953 F. Supp. 2d 1078 (N.D. Cal. 2011) ............................................................................9, 10 Plotts v. Rawlings Co., LLC, 897 F. Supp. 2d 185 (S.D.N.Y. 2012) ...........:................................................................passim United States ex rel. Polansky v. Pfizer, Inc., 2009 U.S. Dist. LEXIS 43438 (E.D.N.Y. May 22, 2009) ..............................................19, 20 Port Wash. Teachers' Assn v. Bd. of Educ., 478 F.3d 494 (2d Cir. 2007) ..................................................................................................17 Redtail Leasing v. Bellezza, 1997 U.S. Dist. LEXIS 14821 (S.D.N.Y. Sept. 29, 1997) ..............................................14, 15 Reisner v. Recco Temp. Servs., Inc., 136 A.D.2d 686, 524 N.Y.S.2d 102 (2d Dep't 1988) ...........................................................13 Rhulen A ~enc_y, Inc. v. Alabama Ins. Guar., Assn, 896 F.2d 674 (2d Cir. 1990) .................................................................................................... 6 United States ex rel. Rodgers v. Arkansas, 154 F.3d 865 (8th Cir. 1998) ................................................................................................18 Rombach v. Chan, 355 F.3d 164 (2d Cir. 2004) ..................................................................................................19 Ruston v. Town Bd. for the Town of Skaneateles, 610 F.3d 55 (2d Cir. 2010) ...................................................................................................... 7 United States ex rel. Sanda~er v. Dell Marketing L P., 2012 U.S. Dist. LEXIS 59714 (D. Minn. Apr. 25, 2012) .....................................................20 Seal v. Gordon, 467 F.2d 602 (2d Cir. 1972) .................................................................................................. 20 Smith v. CVS RX Servs., 2011 U.S. Dist. LEXIS 4667 (N.D.N.Y. Jan.- 14, 2011) .........................................................6 St. Paul Travelers Ins. Co. v. Nandi, 15 Misc.3d 1145(A) (Sup. Ct. Queens Cty. 2007) ................................................................14 Stalley v. Catholic Health Initiatives, 509 F.3d 517 (8th Cir. 2007) ................................................................................................18 2883996.3 iV Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 5 of 29 Stallev v. Methodist Healthcare, 517 F.3d 911 (6th Cir. 2008) ........................:.................................................................16, 17 State Farm Fire & Cas. Co. v. United States ex rel. Rigsby, 137 S. Ct. 436 (2016) ......................................................................................................16, 18 Traffix v. Herold, 269 F. Supp. 2d 223 (S.D.N.Y. 2003) ...................................................................................11 Wood ex rel. United States v. Applied Research Assocs., 328 Fed. Appx. 744 (2d Cir. 2009) .......................................................................................19 United States v. Dialysis Clinic, Inc., 2011 U.S. Dist. LEXIS 4862 (N.D.N.Y. Jan. 19, 2011) .................................................19, 20 Universal Health Servs. Inc. v. United States, 136 S. Ct. 1989 (2016) ..........................................................................................................19 Warth v. Seldin, 422 U.S. 490 (1975) ..............................................................................................................17 Weinberger v. Salfi, 422 U.S. 749 (1975) ................................................................................................................ 9 Wilson v. Chestnut Hill Healthcare, 2000 U.S. Dist. LEXIS 1440 (E.D. Pa. Feb 10, 2000) ........................................................... 9 Woods v. Empire Health Choice, Inc., 574 F.3d 92 (2d Cir. 2009) ....................................................................................................17 Statutes 31 U.S.C. §§ 3730 .......................................................................................................................18 42 U.S.C. § 405 ...................................................:................................................................... 8, 21 42 U.S.C. § 1385w-22~g)~5) ......................................................................................................... 8 42 U.S.C. § 1395 .........................................................................................................................21 2883996.3 V Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 6 of 29 PRELIMINARY STATEMENT Defendant HealthDataInsights, Inc. ("HDI") respectfully submits this Memorandum of Law in support of its motion to dismiss the Complaint of Plaintiff Morningstar Residential Care Center ("Morningstar") in its entirety. Morningstar, a provider of long term residential health care services authorized to bill and receive payment under the Medicare program, commenced this action against Defendant Universal American Corp American Progressive Life &Health Insurance Company of New York ("Universal American") with whom it contracted to provide covered services under a Medicare Advantage Plan known in the marketplace as "Today's Options." Morningstar has also sued HDI, which was retained by Universal American to provide audit review services of the Medicare Advantage payments made by the Today's Options plan to Morningstar. HDI, however, had no contract with and provided no services to Morningstar. Morningstar's Complaint generally alleges that "Defendants" wrongfully sought to recoup payments for health care services that should not have been made to Morningstar. However, Medicare rules and regulations provide specific administrative means for Medicare providers such as Morningstar to challenge payment decisions. To the extent that Morningstar has failed to pursue its payment disputes under the Today's Options Medicare Advantage plan through the prescribed administrative channels, it cannot be permitted to evade the exhaustion requirements by recasting its claims under common law contract, unjust enrichment, or the civil False Claims Act against Universal American, much less against HDI, with whom it has no privity of contract. Morningstar's claims thus "arise under" the Medicare Act and its failure to exhaust administrative remedies for those claims deprives the district court of subject matter 2883996.3 1 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 7 of 29 jurisdiction and requires dismissal of the Complaint under Rule 12(b)(1) of the Federal Rules of Civil Procedure. Even if the Court had subject matter jurisdiction, each of Plaintiff's causes of action, to the extent they are even alleged against HDI, fails to state a claim upon which relief may be granted against HDI. All of Plaintiff's factual allegations and legal claims pertain to Universal American, not HDI. Yet, Morningstar has chosen to draw HDI into this suit when its dispute lies entirely with Universal American. As the audit contractor retained by Universal American to perform audit services for the Today's Options Medicare Advantage plan, HDI simply performed audit review services that are required by federal law and regulations. HDI had no contractual, legal or other relationship with Morningstar and owed no duty it. Nor did HDI make any of the payment decisions or play any part in the recoupment efforts that are at the center of Morningstar's dispute with Universal American. Because Plaintiff's Complaint is devoid of any allegations that support any of the legal requirements of its causes of action against HDI, the Complaint should be dismissed in its entirety pursuant to Rule 12(b)(6), as well as under Rule 8(a) of the Federal Rules of Civil Procedure. BACKGROUND Plaintiff Morningstar provides long term health care services in a residential skilled nursing facility in Oswego, New York. Complaint, ¶ 1. Defendant Universal American issues insurance coverage under a Medicare Advantage plan known as Today's Options. Id., ¶ 3. The Complaint alleges that on January 30, 2015, Morningstar entered into a "Participating Provider Agreement" with Today's Options under which Morningstar agreed to provide, and Today's Options agreed to pay for, covered services for enrollees in a Medicare Advantage Plan. Id., ~6-8. The Complaint does not allege that HDI was a party to the Participating 2883996.3 2 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 8 of 29 Provider Agreement, or that HDI had any agreement or transacted any business whatsoever with Morningstar. Under Section 1893(h) of the Social Security Act, Medicare Advantage plans, such as Today's Options are required to maintain anti-fraud programs, which include conducting payment audits of its providers. Universal American contracted with HDI to act as one of its audit review contractors to perform these required audit services. The allegations in the Complaint directed to HDI are merely that HDI audited certain claims that were paid by Today's Options. Complaint, ¶ 15. As an auditor retained by Universal American, however, HDI did not have authority to adjust or process claims, and HDI made no payment decisions regarding any of the Morningstar claims at issue in the Complaint. All decisions concerning payments, refunds or recoupment from Morningstar were made by Universal American, not HDI. HDI did not attempt to recover any funds from, or invalidate any claims of, Morningstar. Morningstar's claims in this action pertain to several instances in which Universal American determined that it had made overpayments or paid for services that were not covered under its Agreement with Morningstar, and Universal American sought to recoup the payments it had made. The Complaint catalogs instances in which HDI's audit results questioned the amounts paid to Morningstar for certain care and services Morningstar had provided over a period of several years from 2013 through 2016. Complaint, ¶ 13a-n. Although HDI performed the initial audit review work for Universal American, HDI had nothing to do with the decision to pursue recoupment or withhold payments, and Morningstar's Complaint contains no such allegations against HDI. In the course of its audit services, HDI simply identified instances of overpayment or payment for uncovered services, and notified the 2883996.3 3 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 9 of 29 provider of its audit findings and appeal rights, and provided that information to Universal American for further action. The Complaint improperly and erroneously faults unspecified "Defendants" for making determinations of overpayment "without the consent or agreement of Morningstar." Complaint, ¶ 15. Tellingly, Morningstar alleges no legal basis for such an obligation to obtain its consent, and no such obligation exists in law. As the audit contractor engaged by Universal American to perform legally required services for the Today's Options Medicare Advantage plan, HDI was not required to obtain "consent" or "agreement" from Morningstar to perform the audit that Universal American retained it to do, and Morningstar has pointed to no legal authority to support such a claim. Morningstar also improperly and erroneously faults "Defendants" for demanding that certain sums paid to Morningstar be returned to "Defendants" (Id., ¶ 16), and threatening to withhold, and withholding of, payment for future payments to recoup such payments (Id., ¶¶ 17-18). Although HDI performed the required audit services for Universal American and notified Morningstar of the audit finding and its appeal rights with Universal, HDI did not demand payment or otherwise take any action against Morningstar. The ultimate decision on an appeal of an audit finding and to recoup payment rested with Universal American, and Morningstar has not alleged any way in which HDI was involved in the Universal American recoupment effort. In the Complaint, Morningstar asserts seven causes of action. Each of the claims is based on Morningstar's theory that it was entitled to payment from Universal American for services it provided to enrollees under a Medicare Advantage Plan. Those claims, however, 2883996.3 4 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 10 of 29 arise under the Medicare Act, and Morningstar's failure to exhaust administrative remedies for claims arising under the Medicare Act deprives this Court of jurisdiction. However, even if the Court had subject matter jurisdiction, Morningstar's claims should be dismissed pursuant to Rule 12(b)(6) and Rule 8(a) of the Federal Rules of Civil Procedure. Not one of Morningstar's claims is directed specifically at HDI. The Claims for Conversion (Count I), Breach of Implied-In-Law Contract (Count IV) and Unjust Enrichment (Count V) all contain general allegations against "Defendants," and fail to specify any particular acts of HDI that could possibly support those claims. As set forth below, conclusory assertions in the form of "group pleading" that "defendants" engaged in conduct, without differentiating them, are neither proper nor sufficient to state a claim against HDI. Similarly, the claims for Violation of the False Claims Act (Count VI) and Violation of the Medicare Act (Count VII) contain allegations directed to Today's Options only, but then generally request judgment against "Defendants" in the prayer clause with no attempt to specifically state claims as against HDI.1 To the extent that Morningstar purports to allege these additional causes of action against HDI through this vague and unspecified pleading, they have also failed to state any facts or allegations against HDI that support these claims. Accordingly, these claims should also be dismissed. In the end, Plaintiff's imagined dispute is with Universal American, the entity that was in contractual privity with Morningstar and the entity which made the determination that the improper payments to Morningstar be recouped. Morningstar has made no allegation that HDI engaged in payment recovery, collection, or recoupment of any of the payments at issue, or that 1 Morningstar's Claims for Breach of Contract (Count II) and Promissory Estoppel (Count III) contain allegations clearly and specifically asserted against Today's Options only, and judgment is sought against Defendant Today's Options. Because there is no basis for those claims to be construed as against HDI, they are not addressed in this motion. 2883996.3 5 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 11 of 29 HDI accepted or retained the benefit of any funds to which Morningstar alleges it is entitled. Morningstar has also not made any allegation that HDI presented any claim for payment or approval to CMS, much less one that it allegedly knew to be false. Morningstar's attempt to circumvent the exhaustion requirements that apply to its payment disputes with Universal American through vague, unfounded and implausible claims against HDI should thus be rejected, and the Complaint against HDI should be dismissed. ARGUMENT As a threshold matter, Plaintiff's claim should be dismissed for both lack of subject matter jurisdiction under Rule 12(b)(1) and for filing an undifferentiated group pleading under Rule 8(a) of the Federal Rules of Civil Procedure. "Where, as here, the defendant moves for dismissal under Rule 12(b)(1), as well as other grounds, the court should consider the Rule 12(b)(1) challenge first since if it must dismiss the complaint for lack of subject matter jurisdiction, the accompanying defenses and objections become moot and do not need to be determined." Rhulen Agency, Inc. v. Alabama Ins. Guar., Assn, 896 F.2d 674, 678 (2d Cir. 1990). Bobrowsky v. Yonkers Courthouse, 777 F. Supp. 2d 692, 703 (S.D.N.Y. 2011). To oppose a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), plaintiff bears the burden of proving by a preponderance of the evidence that jurisdiction exists. MacPherson v. Town of Southampton, 738 F. Supp. 2d 353, 361 (E.D.N.Y. 2010). To survive a motion to dismiss pursuant to Rule 12(b)(6), a plaintiff must "plead enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 570 (2007). "The plausibility standard asks for more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). This standard "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Smith v. CVS RX Servs., 2011 U.S. Dist. LEXIS 2883996.3 6 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 12 of 29 4667, *3 (N.D.N.Y. Jan. 14, 2011) (quoting Twombly, 550 U.S. at 555 ). Thus, a plaintiff must plead factual allegations sufficient "to raise a right to relief above the speculative level," -- at least enough, that is, to "nudge[] [his] claims across the line from conceivable to plausible." Twomblv, 550 U.S. at 570. "[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss. Determining whether a complaint states a plausible claim for relief [is] acontext-specific task that requires the reviewing court to draw on its judicial experience and common sense." nIc bal, 556 U.S. at 679 (internal quotations omitted); see also Ruston v. Town Bd. for the Town of Skaneateles, 610 F.3d 55, 59 (2d Cir. 2010) ("A court can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth") (citation omitted). "Threadbare recitals of the elements of a cause of action, supported by merely conclusory statements, do not suffice." Hoit v. Capital Dist. Transp. Auth., 2016 U.S. Dist. LEXIS 93576 (N.D.N.Y. July 19, 2016) (citation omitted). In addition, Rule 8 of the Federal Rules of Civil Procedure "requires, at a minimum, that a complaint give each defendant fair notice of what the plaintiff's claim is and the ground upon which it rests." Medina v. Bauer, 2004 U.S. Dist. LEXIS 910 (S.D.N.Y. Jan. 27, 2004) (citation omitted). "Rule 8(a) is violated where a plaintiff, by engaging in "group pleading," fails to give each defendant fair notice of the claims against it." Holmes v. Allstate Corp., 2012 U.S. Dist. LEXIS 24883 (S.D.N.Y. Jan. 27, 2012) (failure to differentiate defendants warranted dismissal under Rule 8(a)); Atuahne v. City of Hartford, 10 F. Appx. 33, 34 (2d Cir. 2001) ("By lumping all the defendants together in each claim and providing no factual basis to distinguish their conduct . . .complaint failed to satisfy" Rule 8). As detailed below, Plaintiff's "group pleading" of allegations against "Defendants" for conversion, breach of implied 2883996.3 7 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 13 of 29 contract and unjust enrichment, as well as the requests for judgment against "Defendants" under the False Claims Act and Medicare Act, warrant dismissal of the Complaint under Rule 8(a). POINT I MORNINGSTAR'S COMPLAINT MUST BE DISMISSED IN ITS ENTIRETY AS TO HDI Although only Count VII of Morningstar's Complaint expressly asserts a claim pursuant to the Medicare Act, Morningstar's failure to exhaust its administrative remedies under the Medicare Act mandates dismissal of the remainder of Morningstar's claims as well. Pursuant to 42 U.S.C. § 405(h), which is made applicable to the Medicare Act by 42 U.S.C. § 1395ii: The findings and decision of the [Secretary] after a hearing shall be binding upon all individuals who were parties to such hearing. No findings of fact or decision of the [Secretary] shall be reviewed by any person, tribunal, or governmental agency except as herein provided. No action against the United States, the [Secretary], or any officer or employee thereof shall be brought under section 1331 or 1346 of title 28 to recover on any claim arising under this subchapter. 42 U.S.C. § 405(h); see also Heckler v. Ringer, 466 U.S. 602, 614-15 (1984); Plotts v. Rawlings Co., LLC, 897 F. Supp. 2d 185, 191 (S.D.N.Y. 2012). The Supreme Court has interpreted the third sentence of this provision to mean that the judicial review mechanism provided for in 42 U.S.C. § 405(g), which is made applicable to Medicare Part C by 42 U.S.C. § 1385w-22(g)(5), "is the sole avenue for judicial review for all `[claims] arising under' the Medicare Act." Heckler, 466 U.S. at 614-15; accord Plotts, 897 F. Supp. 2d at 191; Bodimetric Health Servs. v. Aetna Life & Cas., 903 F.2d 480, 483 (7th Cir. 1990). "[T]o be true to the language of the statute, the inquiry in determining whether [section] 405(h) bars federal-question jurisdiction must be whether the claim `arises under' the Act." 2883996.3 g Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 14 of 29 Heckler, 466 U.S. at 615. The Supreme Court has "construed the `claim arising under' language quite broadly." Id.; accord Bodimetric Health Servs., 903 F.2d at 483. A claim will be deemed to "arise under" the Medicare Act "(1) if ̀ both the standing and substantive basis' for the claim is the Medicare Act, or (2) if the claim is `inextricably intertwined' with a claim for benefits under the Medicare Act." Plotts, 897 F. Supp. 2d at 192 (quoting Heckler, 466 U.S. at 614-15); accord Bentley v. Wellpoint Cos., Inc., No. 11 Civ. 8963 (CM), 2012 U.S. Dist. LEXIS 21731, * 15 (S.D.N.Y. Feb. 17, 2012); Bodimetric Health Servs., 903 F.2d at 483- ., Significantly, this inquiry places substance firmly over form. Courts have made clear that "[a] claim may arise under the Medicare Act even though, as pleaded, it also arises under some other law." Bentlev, 2012 U.S. Dist. LEXIS 21731, at * 15 (citing Weinberger v. Salfi, 422 U.S. 749, 760-61 [1975]). Thus, "[c]ourts `must discount any creative pleading which may transform Medicare disputes into mere state law claims, and painstakingly determine whether such claims are ultimately Medicare disputes. "' Id. (internal quotation marks omitted) (quoting Wilson v. Chestnut Hill Healthcare, No. 99-1468, 2000 U.S. Dist. LEXIS 1440 [E.D. Pa. Feb 10, 2000]); see also Plotts, 897 F. Supp. Zd at 192-93; Bodimetric Health Servs., 903 F.2d at 487; Phillips v. Kaiser Found. Health Plan, Inc., 953 F. Supp. 2d 1078, 1088-89 (N.D. Cal. 2011). Claims involving payment or reimbursement for, or the retention of, benefits under Medicare Advantage plans have specifically been held to "arise under" the Medicare Act. See, ~, Plotts, 897 F. Supp. 2d at 194, 199; Philli s, 953 F. Supp. 2d at 1089; Manorcare Potomac v. Understein, 2002 U.S. Dist. LEXIS 21488, *3-*4 (M.D. Fla. Oct. 16, 2002). Further, exhaustion of administrative remedies has been required before claims "arising under" the 2883996.3 9 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 15 of 29 Medicare Act may be brought against private entities or fiscal intermediaries. See e. ., Plotts, 897 F. Supp. 2d at 191 n.2; Bodimetric Health Servs., 903 F.2d at 487-88; Bentley, 2012 U.S. Dist. LEXIS 21731, at * 17 n.5; Phillips, 953 F. Supp. 2d at 1089; Manorcare Potomac, 2002 U.S.Dist. LEXIS 21488, at *3-*4. Here, each of the seven claims asserted in the Complaint is premised on Morningstar's theory that it was entitled to payment from Universal American for certain services it allegedly provided to members enrolled in the Today's Options Medicare Advantage plan, and that "Defendants" wrongfully determined that the sums paid to Morningstar for those services constituted overpayments and withheld future payments to Morningstar to recoup those overpayments. See generally Com p1aint, ¶¶ 32-75. Because Morningstar's claims are all plainly premised on its dissatisfaction with benefits determinations made under a Medicare Advantage Plan, these claims "arise under" the Medicare Act. See Heckler, 466 U.S. at 614- 15; Plotts, 897 F. Supp. 2d at 192; Bentley, 2012 U.S. Dist. LEXIS 21731, at *15; Bodimetric Health Servs., 903 F.2d at 483-84. Accordingly, Morningstar is not entitled to judicial review unless and until it has exhausted its administrative remedies under the Medicare Act. See Heckler, 466 U.S. at 614- 15; Plotts, 897 F. Supp. 2d at 191; Bodimetric Health Servs., 903 F.2d at 483. Morningstar's failure to allege any facts in its Complaint indicating that it made any effort to pursue or exhaust its administrative remedies deprives this Court of subject matter jurisdiction over each of Morningstar's claims. See Manorcare Potomac, 2002 U.S.Dist. LEXIS 21488, at *4. Dismissal of the Complaint is therefore required pursuant to Fed. R. Civ. P. 12(b)(1) and 12(h)(3). 2883996.3 10 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 16 of 29 POINT II PLAINTIFF'S CLAIM FOR CONVERSION MUST BE DISMISSED In the first cause of action, Morningstar alleges in conclusory fashion that "Defendants have converted property rightfully belonging, due and owing to Morningstar and has [sic] not returned such property", resulting in alleged damages in excess of $75,000. Complaint, ¶ 37- 38. Under New York law, "[c]onversion is an unauthorized assumption and exercise of the right of ownership over [property] belonging to another to the exclusion of the owner's rights." Traffix v. Herold, 269 F. Supp. 2d 223, 228 (S.D.N.Y. 2003) (quotation omitted). When a conversion claim involves money, as opposed to chattel, the money must be specifically identifiable. See, e.~., 9310 Third Ave. Associates Inc v Schaffer Food Sery Co , 210 A.D.2d 207, 208 (2d Dep't 1994) (if the "allegedly converted money is incapable of being described or identified in the same manner as a specific chattel . . . it is not the proper subject of a conversion action.") (citations omitted). Morningstar has improperly alleged conduct by the "Defendants" without specifying any actions attributable to HDI. Group pleading of that nature does not give HDI notice of the grounds for the conversion claim leveled against it as required by Rule 8(a) of the Federal Rules of Civil Procedure, and the conversion claim should be dismissed. Atuahne v. City of Hartford, 10 F. Appx. at 34. Furthermore, the conversion claim is fatally deficient because in order to state a claim for conversion against HDI, Plaintiff must allege that HDI "exercised an unauthorized dominion over that property. . . to the exclusion. of the plaintiff's rights." See Cit.~yracuse v. Loomis Armored US, LLC, 900 F. Supp.2d 274 (N.D.N.Y. 2012) (citation omitted). Morningstar does not -- and cannot -- allege any facts indicating that HDI ever had possession 2883996.3 11 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 17 of 29 of the allegedly converted funds, much less how it exercised dominion over "the money" to the exclusion of Morningstar's rights in order to sustain a conversion claim under New York law. See id. Plaintiff fails to state a plausible claim for conversion against HDI for the additional reason that it makes no attempt to describe or identify the funds converted, and does not state the specific amount of money allegedly converted. The allegation that Morningstar has been damaged "in amount greater than $75,000" does not suffice. See In re Bernard L. Madoff Inv. Securities LLC, 458 B.R. 87, 133 (Bkrtcy. S.D.N.Y. 2011) (holding that Complaint failed to state claim for conversion where it did not seek a specific amount of money converted from a particular account). Morningstar has failed to plausibly plead that HDI converted specific funds belonging to Morningstar. Accordingly, the first cause of action -- to the extent it can be construed as against HDI -- must be dismissed. POINT III PLAINTIFF HAS FAILED TO STATE A CLAIM FOR BREACH OF IMPLIED IN LAW CONTRACT In the fourth cause of action for breach of implied-in-law contract, Morningstar again generally alleges that unspecified "Defendants" have breached an implied-in-law contract by authorizing services and care to Defendants' members, which resulted in covered services for which they are obligated to pay reasonable value. Complaint, ~¶ 51-58. As with the other claims in the Complaint, Morningstar has failed to provide adequate notice to HDI under Rule 8(a) of HDI's conduct that could give rise to such a claim. Moreover, to the extent that the allegations in the fourth cause of action can be construed against HDI, Plaintiff fails to state a claim for breach of an implied-in-law contract claim and it must be dismissed. 2883996.3 12 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 18 of 29 Under New York law, an implied-in-law contract "is an obligation which the law creates in the absence of agreement when one party possesses money that in equity and good conscience he ought not to retain and that belongs to another. It allows plaintiff to recover money which has come into the hands of the defendant impressed with a species of trust because under the circumstances it is against good conscience for the defendant to keep the money."' Parsa v. State, 64 N.Y.2d 143 (1984) (internal citations and quotations omitted). "To recover under a theory of implied in law contract, a `plaintiff must prove that it performed work or services for the defendant which resulted in defendant's unjust enrichment."' Empire State Fuel Corp. v. Warbasse-Cogeneration Techs., 26 Misc. 3d 1215(A), quoting Kapral's Tire Svc, Inc. v. Aztek Tread Corp., 124 A.D.2d 1011 (4th Dept 1986); Joan Hansen & Co., Inc. v. Everlast World's Boxingquarters Corgi, 296 A.D.2d 103 (1st Dept 2002). In other words, the thrust of an implied-in-law contract claim is that plaintiff seeks payment from the defendant for services it provided to the defendant. Here, Morningstar has not alleged, nor did Morningstar perform, services for HDI which resulted in its enrichment. Furthermore, "[w]hat defines an implied contract at law is a duty, because it is clear that no promise or agreement was ever made or intended." Jude Rotenberg Educ. Ctr. Inc. v. Blass, 882 F. Supp. 2d 371 (E.D.N.Y. 2012), citing Bradkin v. Leverton, 26 N.Y.2d 192 (1970); Reisner v. Recco Temp. Servs., Inc., 136 A.D.2d 686 (2d Dep't 1988). Morningstar has alleged no duty that would entitle it to payment from HDI. To the contrary, Morningstar dealt solely with the Today's Options Medicare Advantage plan, and its allegations in the breach of implied contract claim pertain only to Today's Options, not HDI. All of the allegations in Count IV pertaining to the authorization 2883996.3 13 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 19 of 29 for services to "Defendants' members" and the "Defendants" payments relate solely to the Medicare Advantage Plan, not the plan's auditor. HDI does not offer a Medicare Advantage Plan, and had no contract with Morningstar or any other providers. HDL did not have any members, authorize services, or retain any payments allegedly owed to Morningstar. Again, Plaintiff cannot make any allegation that it was in privity of contract with HDI or that HDI owed Morningstar any contractual duty whatsoever. Morningstar should not be permitted to circumvent those threshold requirements through vague, group pleading allegations. Having failed to plead any facts pertaining to HDI which would state a plausible claim, Morningstar's cause of action for breach of implied-in-law contract should be dismissed. POINT IV PLAINTIFF HAS FAILED TO STATE A CLAIM FOR UNJUST ENRICHMENT In the Fifth Claim for Unjust Enrichment, Morningstar alleges that "Defendants" accepted and retained benefits that Morningstar conferred on them by providing services "to and for" Today's Options. Com p1aint, ¶¶ 59-66. Under New York law, "[t]o prevail on a claim of unjust enrichment, a party must show that (1) the other party was enriched, (2) at that party's expense, and (3) that it is against equity and good conscience to permit [the other party] to retain what is sought to be recovered." St. Paul Travelers Ins. Co. v. Nandi, 15 Misc.3d 1145(A) (Sup. Ct. Queens Cty. 2007) (citations omitted). "[A]n unjust enrichment claim, which is aquasi-contract claim, requires some type of direct dealing or actual, substantive relationship with a defendant. Redtail Leasing v. Bellezza, 1997 U.S. Dist. LEXIS 14821 (S.D.N.Y. Sept. 29, 1997). In order to plead a claim for unjust enrichment, plaintiff must allege a nexus between Morningstar and HDI, and that HDI was enriched by some benefit provided by Morningstar to HDI: 2883996.3 14 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 20 of 29 "While the elements of the unjust enrichment claim . . . do not explicitly spell out such a requirement, those elements imply a more substantive relationship, or closer nexus, between a defendant and a plaintiff than Plaintiffs have alleged in this case. The requirements that the defendant be enriched at the plaintiff s expense and that good conscience necessitate that the defendant make restitution to the plaintiff, clearly contemplate that the defendant and the plaintiff must have had some type of direct dealing, an actual relationship or some greater substantive connection than is alleged in this case" Redtail Leasing v. Bellezza, 1997 U.S. Dist. LEXIS 14821 at *22-23, quoting In re Motel 6 Sec. Liti~., 1997 WL 154011, at *7 (S.D.N.Y. Apr. 2, 1997). Morningstar does not -and cannot -make any such allegations against HDI. Here, the Complaint is devoid of any allegations that HDI had any substantive relationship or nexus to Morningstar. Conclusory allegations that Morningstar conferred benefits upon "Defendants" by providing services to "its beneficiaries" are not sufficient to meet the nexus requirement. No services were provided by Morningstar for the benefit of HDI, the Plan's auditor. The Complaint also fails to allege any way in which Morningstar was "enriched." Having failed to allege a relationship with HDI or any benefit that was conferred on HDI as a result of the nursing care services provided to residents of Morningstar, the unjust enrichment claim against HDI must be dismissed. POINT V MORNINGSTAR'S CLAIM UNDER THE FALSE CLAIMS ACT MUST BE DISMISSED AS AGAINST HDI Count VI of Morningstar's Complaint purports to state a claim under the False Claims Act, 31 U.S.C. §§ 3729, et seq. ("FCA" ). Complaint, ¶¶ 67-69. However, Morningstar lacks standing to bring an FCA claim against HDI, and this claim must be dismissed for want of subject matter jurisdiction, pursuant to Fed. R. Civ. P. 12(b)(1) and 12(h)(3). Further, even if Morningstar had standing to assert this claim, its allegations are woefully inadequate to satisfy 2883996.3 15 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 21 of 29 the heightened particularity requirement of Fed. R. Civ. P. 9(b). As such, dismissal is also warranted under Fed. R. Civ. P. 9(b) and 12(b)(6). A. Morningstar's FCA Claim Must be Dismissed Pursuant to Fed. R. Civ. P. 12(b)(1) and 12(h)(3) "The FCA imposes civil liability on an individual who, inter alia, `knowingly presents . . . a false or fraudulent claim for payment or approval' to the Federal Government." State Farm Fire & Cas. Co. v. United States ex rel. Rigsby, 137 S. Ct. 436, 440 (2016) (quoting 31 U.S.C. § 3729[a][1][A]). "Almost unique to the FCA are its qui tam enforcement provisions, which allow a private party known as a `relator' to bring an FCA action on behalf of the Government." RigsbX, 137 S. Ct. at 440. "To maintain a qui tam action under the FCA, a private party must satisfy several procedural requirements." Foster v. Savannah Commc'n, 140 F. App'x 905, 908 (11th Cir. 2005). "Specifically, a private party must first bring the action in the name of the United States government and must have served upon the government `[a] copy of the complaint and written disclosure of substantially all material evidence and information the person possesses."' Id. (quoting 31 U.S.C. §§ 3730[b][1], [b][2]). The requirement that the private plaintiff bring the action in the name of the United States confers standing on the relator and vests the district court with subject matter jurisdiction. See United States ex rel. Antoon v. Cleveland Clinic Found., 788 F.3d 605, 614 (6th Cir. 2015) (if relator fails to plead facts demonstrating that he satisfies the FCA's qui tam requirement, "then he does not have standing and the federal courts do not have subject matter jurisdiction over his FCA claim."); Stalley v. Methodist Healthcare, 517 F.3d 911, 917 (6th Cir. 2008) ("The qui tam action is for redress of an injury to the government; it is the government's injury that confers standing upon the private person...") 2883996.3 16 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 22 of 29 "Article III, section 2 of the Constitution confines federal court jurisdiction to the adjudication of `cases' and `controversies' in which the plaintiff has standing to maintain the suit." United States ex rel. Kreindler & Kreindler v. United Technologies Corgi, 985 F.2d 1148, 1153 (2d Cir. 1993) (citing Warth v. Seldin, 422 U.S. 490, 498 [1975]). Generally, "[i]n order to have standing to bring suit, a plaintiff is constitutionally required to have suffered (1) a concrete, particularized, and actual or imminent injury-in-fact (2) that is traceable to defendant's conduct and (3) likely to be redressed by a favorable decision." Woods v. Empire Health Choice, Inc., 574 F.3d 92, 96 (2d Cir. 2009) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 [1992]; Port Wash. Teachers' Assn v. Bd. of Educ., 478 F.3d 494, 498 [2d Cir. 2007]); see also Vermont Agency of Natural Resources, 529 U.S. 765, 771-72 (2000). The traditional test for standing typically does not apply in a ui tam action under the FCA, where the relator does not seek redress for its own injury in fact, but rather "brings suit on behalf of the Government to recover a remedy for a harm done to the Government." Woods, 574 F.3d at 97; see also Kreindler & Kreindler, 985 F.2d at 1154. However, " ui tam plaintiffs, even if not personally injured by a defendant's conduct, possess constitutional standing to assert claims on behalf of the Government as its effective assignees." Woods, 574 F.3d at 97; see also Vermont Agency of Natural Resources, 529 U.S.at 773. "Ina qui tam action, the plaintiff sues on behalf of and in the name of the government and invokes the standing of the government resulting from the fraud injury." Kreindler & Kreindler, 985 F.2d at 1154 (citing United States ex rel. Milam v. Univ. of Texas M.D. Anderson Cancer Ctr., 961 F.2d 46, 49 [4th Cir. 1992]); see also Vermont Acv of Natural Resources, 529 U.S.at 774; Methodist Healthcare, 517 F.3d at 917 ("The ui tam action is for redress of an injury to the government; it is the government's injury that confers standing upon 2883996.3 17 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 23 of 29 the private person . . .and the qui tam plaintiff has standing because he is a partial assignee of the United States' [] claims against a defendant"). A plaintiff has no private right of action and lacks standing to bring a claim on its own behalf under the FCA where the plaintiff has sustained no injury in fact. As courts have held, "` [q]ui tam relators cannot and do not sue for FCA violations on their own behalf. Rather, they sue on behalf of the government as agents of the government, which is always the real party in interest."' United States ex rel. Rodgers v. Arkansas, 154 F.3d 865, 868 (8th Cir. 1998) (citation omitted); see also Stalle_y v. Catholic Health Initiatives, 509 F.3d 517, 522 (8th Cir. 2007) (holding that a statute "may not be a Qui tam statute if Congress intended the plaintiff to act as a private plaintiff, asserting his own injury, rather than as a relator, asserting the government's injury") Here, Morningstar does not purport to bring its FCA claim on behalf of or in the name of the Government. Complaint, ¶¶ 67-69. Rather, the Complaint is brought exclusively in Morningstar's name, and seeks only to recover damages on its own behalf. Morningstar has failed to plead any facts demonstrating that it has standing to assert its FCA claim, and subject matter jurisdiction is therefore lacking. See Vermont Agency of Natural Resources, 529 U.S.at 773-74; Antoon, 788 F.3d at 614; Kreindler & Kreindler, 985 F.2d at 1154. Accordingly, Count VI of the Complaint must be dismissed pursuant to Fed. R. Civ. P. 12(b)(1).2 2 Plaintiff also failed to adhere to the procedural requirements of filing the Complaint in camera, under seal and serving the government a copy of the Complaint and written disclosure of substantially all material evidence and information on which the claim is based. See 31 U.S.C. § 3730[b][1], [b][2]. This deficiency in the claim warrants dismissal as well, although it is not a jurisdictional defect. See Ri~X, 137 S. Ct. at 442. 2883996.3 18 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 24 of 29 B. Morningstar's FCA Claim Must be Dismissed Pursuant to Fed. R. Civ. P. 9(b) and 12(b)(6) Even assuming that Morningstar could assert standing to bring its FCA claim and subject matter jurisdiction was not lacking, dismissal would be required based on the Complaint's wholesale failure to state any of its FCA allegations against HDI with the specificity required by Rule 9(b). The Second Circuit "has held that FCA claims fall within the scope of Rule 9(b), which requires that plaintiffs `state with particularity the specific statements or conduct giving rise to the fraud claim."' Bishop v. Wells Faro & Co., 823 F.3d 35, 43 (2d Cir. 2016) (quoting Gold v. Morrison-Knudsen Co., 68 F.3d 1475, 1477 [2d Cir. 1995]), abrogated on other grounds by Universal Health Servs. Inc v United States, 136 S. Ct. 1989 (2016); see also United States ex rel. Chapman v. Office of Children &Family Servs. of New York, 2010 U.S. Dist. LEXIS 14938, * 10 (N.D.N.Y. Feb. 16, 2010), aff d 423 Fed. Appx. 104 (2d Cir. 2011). "Pleadings subject to Rule 9(b) must `(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent."' Bishop, 823 F.3d at 43 (quoting Rombach v. Chan, 355 F.3d 164, 170 [2d Cir. 2004]). "Where [the] complaint fails to specify the time, place, speaker, and content of the alleged misrepresentations, it will lack the particulars required by 9(b)." United States v. DialXsis Clinic, Inc., 2011 U.S. Dist. LEXIS 4862, *28 (N.D.N.Y. Jan. 19, 2011). Moreover, a Qui tam "`relator must plead details that identify particular false claims for payment that were submitted to the government."' United States ex rel. Polansky v. Pfizer, Inc., 2009 U.S. Dist. LEXIS 43438, *11 (E.D.N.Y. May 22, 2009) (citation omitted). If an FCA complaint "doles] not cite to a single identifiable record or billing submission [the relator] 2883996.3 19 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 25 of 29 claims] to be false, or give a single example of when a purportedly false claim was presented for payment by a particular defendant at a specific time," its "allegations are plainly insufficient under Rule 9(b)." Wood ex rel. United States v. Applied Research Assocs., 328 Fed. Appx. 744, 750 (2d Cir. 2009) (internal quotation omitted); see also Polansky, 2009 U.S. Dist. LEXIS 43438, at * 11-* 12. Further, conclusory allegations unsupported by factual details will not suffice to satisfy the particularity requirements of Rule 9(b). Cha,.pman, 2010 U.S. Dist. LEXIS 14938, at *12 (dismissing the complaint because the plaintiff "summarily concluded] that the defendants submitted false claims to the government" after making only general, non-specific factual allegations); United States ex rel. Joshi v. St. Luke's Hosp•, Inc•, 441 F.3d 552, 557 (8th Cir. 2006); United States ex rel. Sanda~er v. Dell Marketing L.P., No. 08-4805 (PAM/TNL), 2012 U.S. Dist. LEXIS 59714, *33 (D. Minn. Apr. 25, 2012); see also, Gold, 68 F.3d at 1477 (affirming the dismissal of the plaintiff's FCA complaint because he failed "to state with particularity the specific statements or conduct giving rise to the fraud claim"). Likewise, "[a]s a general rule, Rule 9(b) pleadings cannot be based upon information and belief." Dial Clinic, 2011 U.S. Dist. LEXIS 4862, at *29 (citing Segal v. Gordon, 467 F.2d 602, 608 [2d Cir. 1972]). Here, Morningstar's FCA claim does not include any specific factual allegations whatsoever, much less any specific factual allegations involving HDI. Rather, the entire FCA claim consists of a single, conclusory allegation stated merely "[u]pon information and belief' that "Today's Options presented, or caused to be presented a claim for payment or approval to CMS, knowing the claim to be false or fraudulent." Com p1aint, ¶ 69. This allegation plainly falls far short of the mark. Accordingly, Count VI of the Complaint must be dismissed for 2883996.3 2~ Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 26 of 29 failure to satisfy the particularity requirements of Fed. R. Civ. P. 9 (b), and failure to state a claim upon which relief can be granted, pursuant to Fed. R. Civ. P. 12(b)(6). POINT VI MORNINGSTAR'S MEDICARE ACT CLAIM MUST BE DISMISSED AS AGAINST HDI In Count VII of its Complaint, Morningstar alleges that Today's Options violated the Medicare Act, 42 U.S.C. § 1395, et seq., by withholding payments for services. Complaint, ¶¶ 72-75. Dismissal of this claim is required because Morningstar failed to exhaust its administrative remedies under the Medicare Act. See 42 U.S.C. § 405(g); 42 U.S.C. § 1395ff; 42 C.F.R. § 422.560, et seq.; see also Heckler v. Rimer, 466 U.S. 602, 614-15 (1984); Plotts v. Rawlings Co., LLC, 897 F. Supp. 2d 185, 191-93 (S.D.N.Y. 2012); Jamaica Hosp. Nursing Home v. Oxford Health Plans, 2000 U.S. Dist. LEXIS 13917, *6-*7 (S.D.N.Y. Sept. 25, 2000). The Medicare Act and its implementing regulations set forth a detailed administrative process by which an enrollee in a Medicare Advantage Plan, or the enrollee's provider, must seek reconsideration and review of determinations with which they are dissatisfied before they are entitled to judicial review. See 42 U.S.C. § 405(g); 42 U.S.C. § 1395ff; 42 C.F.R. § 422.560, et seq.; see also Plotts, 897 F. Supp. 2d at 191-93; Jamaica Hosp. Nursing Home, 2000 U.S. Dist. LEXIS 13917, at *6-7.3 "As the Supreme Court has explained, `the sole avenue of judicial review for all claims arising under the Medicare Act' is through the exhaustion of administrative remedies before the Secretary [of the Department of Health and Human Services]." Plotts, 897 F. Supp. 2d at 191 3 In addition to seeking reconsideration by the plan, the enrollee or provider must first pursue an administrative hearing before the Secretary of the Department of Health and Human Services and obtain a final decision from the Secretary before seeking judicial review of eligible claims. 2883996.3 21 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 27 of 29 (quoting Heckler, 466 U.S. at 614-15); see also Jamaica Hosp. Nursing Home, 2000 U.S. Dist. LEXIS 13917, at *6 (holding that judicial review is available only for "final decisions," and "[a] decision is only final after one has exhausted the administrative review process set forth in the applicable regulations"). "[T]he courts do not have jurisdiction over any action arising under the Medicare Act that does not meet the requirements of [42 U.S.C.] § 405(g)." Jamaica Hosp. Nursin Home, 2000 U.S. Dist. LEXIS 13917, at *7; see also Plotts, 897 F. Supp. 2d at 191-93. Morningstar's Complaint includes no allegations indicating that Morningstar even attempted to pursue, much less exhausted, the obligatory administrative review process prior to bringing its claim under the Medicare Act. Nonetheless, without making any effort to state how it satisfied the exhaustion requirement for disputing a payment or recoupment from a Medicare Advantage Plan, Morningstar alleges in its seventh claim that Toda.~ ptions violated the Medicare Act by withholding payments for services. Complaint, ¶ 75. Morningstar should not be permitted to circumvent the exhaustion requirement and litigate its payment dispute with the Medicare Advantage Plan by suing HDI under the Medicare Act in federal court. Because Morningstar has failed to demonstrate the existence of subject matter jurisdiction for its Medicare Act claim, it should be dismissed pursuant to Fed. R. Civ. P. 12(b)(1) and 12(h)(3). Further, even if the Court had subject matter jurisdiction over this claim, which it does not, the allegations of Morningstar's seventh claim fail to state a plausible claim for relief against HDI under the Medicare Act. Although the allegations are against Today's Options only (see Complaint, ¶¶ 70-75), the prayer for relief seeks judgment on the Medicare Act claim against "Defendants." The claim states in conclusory fashion that the "Conditions for Payment 2883996.3 22 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 28 of 29 for Medicare services" are contained in the Medicare Act. Id., ¶ 74. However, Morningstar failed to state what those requirements are, or how either of the "Defendants" violated them. Morningstar has not alleged, and HDI has not had any, involvement with recoupment of payments or the alleged withholding of payments. Having failed to allege any facts indicating how HDI violated any provision of the Medicare Act, the claim should be dismissed both under Fed. R. Civ. P. 8(a) and 12(b)(6). CONCLUSION For all of the foregoing reasons, the Complaint against HDI should be dismissed in its entirety. Respectfully submitted, Dated: Apri125, 2017 BOND, SCHOENECK &KING, PLLC By: s/Suzanne O. Galbato Suzanne O. Galbato Hermes Fernandez Attorneys for Defendant HealthDatalnsights, Inc. One Lincoln Center Syracuse, New York 13202 Telephone: 315-218-8000 2883996.3 23 Case 5:17-cv-00119-FJS-TWD Document 15-1 Filed 04/25/17 Page 29 of 29 UNITED STATE DISTRICT COURT NORTHERN DISTRICT OF NEW YORK MORNINGSTAR RESIDENTIAL CARE CENTER, v. Plaintiff, HEALTHDATAINSIGHTS,INC., UNIVERSAL AMERICAN SPIN CORP. d/b/a AMERICAN PROGRESSIVE LIFE &HEALTH INSURANCE COMPANY OF NEW YORK, agent of TODAY'S OPTIONS, Defendants. CERTIFICATE OF SERVICE Civil Action No. 5:17-CV-00119 (FJS/TWD) I hereby certify that on April 25, 2017, I caused to be filed the foregoing Notice of Motion to Dismiss and Memorandum of Law in Support of Motion to Dismiss with the Clerk of the Court via the CM/ECF system, which sent notification of such filing to the following: TO: Jessica S. Winik Ferber, Esq. Schutjer Bogar Attorney fog Plaintiff jferber~s-b-b.com Katie Z. Van Lake, Esq. Sb2, Inc. Attorney for Plaintiff kvanlake(a~ s-b-b. com Stephen M. Buhr, Esq. Greenberg Traurig, LLP -Albany Office Attorney for Defendant Universal American Spin Corp. d/b/a AmeNican Progressive Life &Health Insurance Company of New York, agent of Today's Options buhrs(a~~tlaw.com 2894819.1 4/25/2017 Case 5:17-cv-00119-FJS-TWD Document 15-2 Filed 04/25/17 Page 1 of 2 Dated: April 25, 2107 BOND, SCHOENECK &KING, PLLC By: s/Suzanne O. Galbato Suzanne O. Galbato, Esq. (510058) Hermes Fernandez (103444) Attorneys for Defendants HealthDatalnsights, Inc. One Lincoln Center Syracuse, New York 13202 Telephone: (315) 218-8000 2 2894819.1 4/25/2017 Case 5:17-cv-00119-FJS-TWD Document 15-2 Filed 04/25/17 Page 2 of 2